(Bloomberg) — U.S. social media giants lost nearly $47 billion in market value in extended trading Thursday as disappointing earnings from Snap Inc. raised concerns about the prospects for online advertising.
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The Snapchat parent tumbled 27% in the after-hours session. Facebook’s parent company Meta Platforms Inc. and Pinterest Inc. were down more than 4%, while Google owner Alphabet Inc. and Twitter Inc. also decreased.
The losses marked the second major sector selloff triggered by Snap in two months, as its results became a barometer for investors trying to decipher how economic uncertainty has affected ad spending. There are growing signs that tech companies are bracing for a recession with some hiring cuts, while Meta has lost about half its value this year after disappointing earnings forecasts.
“Earnings optimism may stop for now,” said Tina Teng, market analyst at CMC Markets Plc. in Auckland. “Snap’s miss on earnings expectations shows the serious challenges facing its tech peers, typically on social platforms like Meta Platforms.”
Snap — which saw a $6 billion market cap wipe after hours Thursday — did not issue financial guidance for the third quarter, except to say that revenue so far in the period was largely unchanged from last year. Management also reiterated that it plans a “significantly reduced hiring rate,” echoing Apple Inc.’s plans. and other.
Vital Knowledge called Snap and hard drive maker Seagate Technology Holdings Plc’s results “terrible” and “ugly.” Already battered tech stocks may face more pressure as earnings season ramps up next week.
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“With more and more mega-cap tech companies planning to slow hiring and lower their growth expectations, the economic outlook is certainly not in good shape,” CMC’s Teng said.
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